Carlsberg suffers loss on costs

Carlsberg A/S, the Danish brewer that took over Scottish & Newcastle Plc last month with Heineken NV, reported a first-quarter loss on higher costs for power, malt and aluminum.

The net loss of 129 million kroner ($26.8 million) compares with a 45 million-krone profit a year earlier, the Valby, Denmark-based company said yesterday in a stock-exchange statement. The brewer was expected to report net income of 37.8 million kroner, according to the average of five analysts' estimates compiled by Bloomberg.

The acquisition gave Carlsberg, Denmark's largest brewer, control of a joint venture that sells beer in Russia, where sales are rising as western European markets stagnate or shrink. The brewer is looking to emerging markets for growth and plans further price increases as commodity costs surge.

"In the first quarter, the brewers face the full impact of input-cost increases," Nico Lambrechts, an analyst at Merrill Lynch in London with a "neutral" rating on Carlsberg, wrote in an April 22 research report.

First-quarter sales gained 6.5 percent to 9.44 billion kroner, slowing from the year-earlier 14 percent without a boost from an unusually warm Russian winter.

The brewer said yesterday it's "prevented" from providing guidance because of plans to sell stock to existing investors.

Carlsberg fell 10 kroner, or 1.5 percent, to 656 kroner in Copenhagen trading on Tuesday. The stock has added 6.3 percent this year, the only climb in the seven-company Bloomberg Europe Beverages Index, which has dropped 12 percent.

The beermaker has said its costs for energy, aluminum and malt rose by at least 600 million kroner in 2007. Rexam Plc, the world's largest maker of beverage cans, has renegotiated about a third of its European supply contracts for this year to reflect increased prices. Finnish malt maker Raisio Oyj increased prices in the quarter after its grain costs rose.

The brewer, which made its first beer in 1847, still owned just half of joint venture Baltic Beverages Holding AB during the quarter, only securing full control in April. BBH unit OAO Baltika Breweries, the largest Russian beer company, said yesterday that first-quarter profit was little changed after demand slowed without a year-earlier boost from an unusually mild winter, while costs increased.

Profitability was hurt by "the unfavorable situation on global commodity markets, higher transport and energy prices, a temporary increase in amortization and equipment costs during the season of low sales", St. Petersburg-based Baltika said in an e-mailed statement yesterday.

Agencies

(China Daily 05/08/2008 page16)